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Summer spirit

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  • After the dramas of last week, a certain summer languor seems set to spread over financial markets. Our US team have revised up the 2014 calendar average GDP forecast to reflect the historical GDP revisions. The forecast moved from 1.7% to 2.1%.
  • The US Senior Loan Officers' survey of bank lending may make an appearance today (timing is uncertain). The data is of less interest than hitherto, now that the path of quantitative policy reduction is so clearly mapped out.
  • Banks are in focus in the Euro area as Portugal (recently exited from EU support) stepped in to bail out Banco Espirito Santo. There does not seem to be much systemic risk, though the bail-out emphasises how far the Euro area is from a proper banking union.
  • Euro producer price inflation is expected to show deflation when released today. Producer price data has a lot flexible prices in it, while consumer price data is mainly comprised of sticky prices, hence the absence of deflation in the latter.

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